<PAGE>
PaineWebber
Enhanced S&P 500 Fund
PaineWebber
Enhanced Nasdaq-100 Fund
---------------------------
PROSPECTUS
March 8, 2000
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This prospectus offers four classes of shares in two of PaineWebber's stock
funds--Classes A, B, C and Y. Each class has different sales charges and
ongoing expenses. You can choose the class that is best for you based on how
much you plan to invest and how long you plan to hold your fund shares. Class Y
shares are available only to certain types of investors.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved either fund's shares or determined whether this
prospectus is complete or accurate. To state otherwise is a crime.
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PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
Contents
The Funds
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PaineWebber Enhanced S&P 500 Fund:
<TABLE>
<S> <C>
3 Investment Objective, Strategies and Risks
5 Expenses and Fee Tables
</TABLE>
What every investor should know about the funds
PaineWebber Enhanced Nasdaq-100 Fund:
<TABLE>
<S> <C>
6 Investment Objective, Strategies and Risks
8 Expenses and Fee Tables
9 More About Risks and Investment Strategies
</TABLE>
Your Investment
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<TABLE>
<S> <C>
11 Managing Your Fund Account
--Initial Subscription Period
--Flexible Pricing
--Buying Shares
--Selling Shares
--Exchanging Shares
--Pricing and Valuation
</TABLE>
Information for managing your fund account
Additional Information
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<TABLE>
<S> <C>
17 Management
19 Dividends and Taxes
20 Appendix
</TABLE>
Additional important information about the funds
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<TABLE>
<S> <C>
Back Cover
</TABLE>
Where to learn more about PaineWebber mutual funds
The funds are not complete or
balanced investment programs.
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Prospectus Page 2
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PaineWebber Enhanced S&P 500 Fund
PaineWebber Enhanced S&P 500 Fund
Investment Objective, Strategies and Risks
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Fund Objective
To seek higher total return over the long term than the S&P 500 Index.
Principal Investment Strategies
The fund seeks to achieve its investment objective by using its sub-adviser's
proprietary enhanced S&P 500 strategy to invest in a selection of common stocks
that are included in the Standard & Poor's Composite Index of 500 Stocks ("S&P
500 Index"). The fund expects normally to invest in approximately 250 to 400
stocks and to weight its holdings of individual stocks based on its sub-
adviser's proprietary enhanced S&P 500 strategy. Compared to the stock
weightings in the S&P 500 Index, the fund overweights stocks that its strategy
ranks positively and underweights stocks that its strategy ranks negatively.
Generally, the fund gives stocks with a neutral ranking the same weight as in
the S&P 500 Index.
The fund seeks to control the risk of its portfolio by maintaining an overall
close correlation between its performance and the performance of the S&P 500
Index over time, with a relatively low tracking error. To maintain this
correlation, the fund gives each stock in its portfolio a weighting that is
close to the S&P 500 Index weighting and, if necessary, readjusts the weighting
when it rebalances the portfolio. The fund also considers relative industry and
sector weightings and market capitalization. The fund generally expects to
rebalance its portfolio monthly but may do so more often if its sub-adviser
considers it appropriate to do so.
The fund may invest in U.S. dollar-denominated foreign securities that are
included in S&P 500 Index. The fund may (but is not required to) use options,
futures contracts and other derivatives. The fund may use these instruments in
strategies intended to simulate investment in the S&P 500 Index stocks while
retaining a cash balance for fund management purposes. The fund also may use
these instruments to reduce the risk of adverse price movements while investing
cash received when investors buy shares, to facilitate trading and to reduce
transaction costs.
Mitchell Hutchins Asset Management Inc., the fund's investment adviser, has
selected DSI International Management, Inc. ("DSI") to serve as the fund's sub-
adviser. In selecting securities for the fund, DSI seeks to add value to the
fund's portfolio through stock selection while managing the fund's risk
profile. DSI believes that
. undervalued securities with improving fundamentals should outperform a given
benchmark;
. during different market environments different factors can become more or
less significant; and
. unintended deviations from the benchmark should be minimized.
In deciding which stocks to buy and sell for the fund, DSI uses its proprietary
enhanced S&P 500 strategy, which consists of an adaptive stock ranking model
and a portfolio construction model. DSI has developed a quantitative, dynamic,
bottom up, multi-factor model to rank the stocks in the S&P 500 Index, using
relatively independent factors (such as earnings expectations, earnings growth,
valuation, yield, return on equity and margins). DSI believes that these
factors have varying influences during different phases of the stock market
cycle and reevaluates the relative importance and weighting of each factor
monthly. DSI applies this adaptive stock ranking model to the stocks in the S&P
500 Index, so that relative rankings of the stocks in the S&P 500 Index may
change from month to month.
Principal Risks
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
Common stocks, which are the fund's main type of investment, generally
fluctuate in value more than other investments. Because the fund invests in
accordance with DSI's proprietary enhanced S&P 500 strategy, the fund expects a
close correlation between its performance and that of the S&P 500 Index in both
rising and falling markets. This strategy, however, may not be successful in
selecting a portfolio for the
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Prospectus Page 3
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PaineWebber Enhanced S&P 500 Fund
fund that outperforms the total return of the S&P 500 Index. As a result, the
fund may not achieve its investment objective and may even underperform
relative to the S&P 500 Index. The fund's performance also may deviate from
that of the S&P 500 Index due to the daily cash flows to which the fund is
subject and which will result in ongoing purchases and sales of stocks and
transactional expenses, including brokerage fees. In addition, the fund must
pay fees and expenses that are not borne by the S&P 500 Index.
The fund's investments in derivatives may rise or fall more rapidly than other
investments. Foreign securities involve risks that normally are not associated
with securities of U.S. issuers.
More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies." In particular,
see the following headings:
. Equity Risk
. DSI Proprietary Strategy Risk
. Derivatives Risk
. Foreign Securities Risk
Performance Information
The fund is newly organized. As a result, it has no operating history or
performance information to include in a bar chart or table reflecting average
annual returns. See "Management--Enhanced S&P 500 Fund--Additional Information
About DSI" for information about the performance of private accounts managed by
DSI with discretionary authority using its proprietary enhanced S&P 500
strategy.
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Prospectus Page 4
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PaineWebber Enhanced S&P 500 Fund
Expenses and Fee Tables
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Fees and Expenses These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
Shareholder Transaction Expenses (fees paid directly from your investment)
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases
(as a % of offering price).................... 3% None None None
Maximum Contingent Deferred Sales Charge (Load)
(CDSC)
(as a % of offering price).................... None 3% 0.65% None
Exchange Fee................................... None None None None
</TABLE>
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees................................ 0.40% 0.40% 0.40% 0.40%
Distribution and/or Service (12b-1) Fees....... 0.25 0.65 0.65 None
Other Expenses*................................ 0.33 0.33 0.33 0.33
---- ---- ---- ----
Total Annual Fund Operating Expenses........... 0.98% 1.38% 1.38% 0.73%
==== ==== ==== ====
</TABLE>
- -------
* "Other Expenses" are based on estimated amounts for the current fiscal year.
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same, except that
the fund's initial organizational expenses are only included for its first
year. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
------ -------
<S> <C> <C>
Class A.......................................................... $397 $592
Class B (assuming sale of all shares at end of period)........... 441 626
Class B (assuming no sale of shares)............................. 141 426
Class C (assuming sale of all shares at end of period)........... 206 426
Class C (assuming no sale of shares)............................. 141 426
Class Y.......................................................... 75 233
</TABLE>
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Prospectus Page 5
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PaineWebber Enhanced Nasdaq-100 Fund
PaineWebber Enhanced Nasdaq-100 Fund
Investment Objective, Strategies and Risks
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Fund Objective
To seek higher total return over the long term than the Nasdaq-100 Index.
Principal Investment Strategies
The fund seeks to achieve its investment objective by following its sub-
adviser's proprietary enhanced Nasdaq-100 strategy to invest primarily in a
selection of common stocks that are included in the Nasdaq-100 Index(R)
("Nasdaq-100 Index"). The fund expects normally to invest in a majority of the
stocks in the Nasdaq-100 Index and to weight its holdings of individual stocks
based on its sub-adviser's proprietary enhanced Nasdaq-100 strategy. Compared
to the stock weightings in the Nasdaq-100 Index, the fund overweights stocks
that its strategy ranks positively and underweights stocks that its strategy
ranks negatively. Generally, the fund gives stocks with a neutral ranking the
same weight as in the Nasdaq-100 Index.
The fund seeks to control the risk of its portfolio by maintaining a general
correlation between its performance and the performance of the Nasdaq-100 Index
over time, but does not expect to maintain as close a correlation as Enhanced
S&P 500 Fund does to its benchmark index. To maintain this general correlation,
the fund gives each stock in its portfolio a weighting that is close to the
Nasdaq-100 Index weighting and, if necessary, readjusts the weighting when it
rebalances the portfolio. The fund also considers relative industry and sector
weightings and market capitalization. The fund generally expects to rebalance
its portfolio monthly but may do so more often if its sub-adviser considers it
appropriate to do so. As of February 29, 2000, approximately 72% of the value
of the stocks currently in the Nasdaq-100 Index were in the technology sector,
and the fund expects that its investments will reflect a similar concentration
in the technology sector.
The fund may invest in U.S. dollar-denominated foreign securities that are
included in the Nasdaq-100 Index. The fund may (but is not required to) use
options, futures contracts and other derivatives. The fund may use these
instruments in strategies intended to simulate investment in the Nasdaq-100
Index stocks while retaining a cash balance for fund management purposes. The
fund also may use these instruments to reduce the risk of adverse price
movements while investing cash received when investors buy shares, to
facilitate trading and to reduce transaction costs.
Mitchell Hutchins Asset Management Inc., the fund's investment adviser, has
selected DSI International Management, Inc. ("DSI") to serve as the fund's sub-
adviser. In selecting securities for the fund, DSI seeks to add value to the
fund's portfolio through stock selection while managing the fund's risk
profile. DSI believes that
. undervalued securities with improving fundamentals should outperform a given
benchmark;
. during different market environments different factors can become more or
less significant; and
. unintended deviations from the benchmark should be minimized.
In deciding which stocks to buy and sell for the fund, DSI uses its proprietary
enhanced Nasdaq-100 strategy, which consists of an adaptive stock ranking model
and a portfolio construction model. DSI has developed a quantitative, dynamic,
bottom up, multi-factor model to rank the stocks in the Nasdaq-100 Index, using
relatively independent factors (such as earnings expectations, earnings growth,
valuation, return on equity and margins). DSI believes that these factors have
varying influences during different phases of the stock market cycle and
reevaluates the relative importance and weighting of each factor monthly. DSI
applies this adaptive stock ranking model to the stocks in the Nasdaq-100
Index, so that relative rankings of the stocks in the Nasdaq-100 Index may
change from month to month.
Principal Risks
An investment in the fund is not guaranteed; you may lose money by investing in
the fund.
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Prospectus Page 6
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PaineWebber Enhanced Nasdaq-100 Fund
Common stocks, which are the fund's main type of investment, generally
fluctuate in value more than other investments. Because the fund invests in
accordance with DSI's proprietary enhanced Nasdaq-100 strategy, the fund
expects a general correlation between its performance and that of the Nasdaq-
100 Index in both rising and falling markets. This strategy, however, may not
be successful in selecting a portfolio for the fund that outperforms the total
return of the Nasdaq-100 Index. As a result, the fund may not achieve its
investment objective and may even underperform relative to the Nasdaq-100
Index. The fund's performance also may deviate from that of the Nasdaq-100
Index due to the daily cash flows to which the fund is subject and which will
result in ongoing purchases and sales of stocks and transactional expenses,
including brokerage fees. In addition, the fund must pay fees and expenses that
are not borne by the Nasdaq-100 Index.
The stocks in the Nasdaq-100 Index are concentrated in the technology sector
and the fund's investments also are expected to be concentrated in this sector
to permit its portfolio generally to follow the Nasdaq-100 Index. As a result,
both the price performance of the Nasdaq-100 Index and the price of the fund's
shares may be more volatile when compared to other broad-based stock indices.
In addition, the fund's performance will be more severely affected by
unfavorable developments in the technology industry than if it invested in a
broader range of businesses. Because the fund is non-diversified, it can invest
more of its assets in a single issuer than a diversified fund can and expects
to do so as necessary generally to follow the Nasdaq-100 Index. As a result,
changes in the market value of a single issuer can have a greater effect on the
fund's performance and share price than if the fund held a smaller position.
The fund's investments in derivatives may rise or fall more rapidly than other
investments. Foreign securities involve risks that normally are not associated
with securities of U.S. issuers.
More information about these and other risks of an investment in the fund is
provided below in "More About Risks and Investment Strategies." In particular,
see the following headings:
. Equity Risk
. DSI Proprietary Strategy Risk
. Technology Sector Concentration Risk
. Individual Stock Concentration Risk
. Derivatives Risk
. Foreign Securities Risk
Performance Information
The fund is newly organized. As a result, it has no operating history or
performance information to include in a bar chart or table reflecting average
annual returns.
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Prospectus Page 7
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PaineWebber Enhanced Nasdaq-100 Fund
Expenses And Fee Tables
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Fees and Expenses These tables describe the fees and expenses that you may pay
if you buy and hold shares of the fund.
Shareholder Transaction Expenses (fees paid directly from your investment)
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases
(as a % of offering price).................... 4.5% None None None
Maximum Contingent Deferred Sales Charge (Load)
(CDSC)
(as a % of offering price).................... None 5% 1% None
Exchange Fee................................... None None None None
</TABLE>
Annual Fund Operating Expenses (expenses that are deducted from fund assets)
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
------- ------- ------- -------
<S> <C> <C> <C> <C>
Management Fees................................ 0.75% 0.75% 0.75% 0.75%
Distribution and/or Service (12b-1) Fees....... 0.25 1.00 1.00 None
Other Expenses*................................ 0.28 0.28 0.28 0.28
---- ---- ---- ----
Total Annual Fund Operating Expenses........... 1.28% 2.03% 2.03% 1.03%
==== ==== ==== ====
</TABLE>
- -------
* "Other Expenses" are based on estimated amounts for the current fiscal year.
Example
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods unless
otherwise stated. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same, except that
the fund's initial organizational expenses are only included for its first
year. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
<TABLE>
<CAPTION>
1 year 3 years
------ -------
<S> <C> <C>
Class A.......................................................... $575 $832
Class B (assuming sale of all shares at end of period)........... 706 930
Class B (assuming no sale of shares)............................. 206 630
Class C (assuming sale of all shares at end of period)........... 306 630
Class C (assuming no sale of shares)............................. 206 630
Class Y.......................................................... 105 321
</TABLE>
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Prospectus Page 8
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PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
More About Risks And Investment Strategies
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Principal Risks
The main risks of investing in one or both of the funds are described below.
Not all of these risks apply to each fund. You can find a list of the main
risks that apply to a particular fund by looking under the "Investment
Objective, Strategies and Risks" heading for that fund.
Other risks of investing in a fund, along with further detail about some of
the risks described below, are discussed in the funds' Statement of Additional
Information ("SAI"). Information on how you can obtain the SAI is on the back
cover of this prospectus.
Equity Risk. The prices of common stocks and other equity securities generally
fluctuate more than those of other investments. They reflect changes in the
issuing company's financial condition and changes in the overall market.
Common stocks generally represent the riskiest investment in a company. A fund
may lose a substantial part, or even all, of its investment in a company's
stock.
DSI Proprietary Strategy Risk. By using DSI's proprietary strategies, each
fund seeks to outperform the total return of its benchmark index and to
maintain a correlation between the fund's performance and that of the
benchmark index in both rising and falling markets. The DSI proprietary
strategies, however, may not be successful in selecting a portfolio for a fund
that outperforms the total return of its benchmark index. As a result, a fund
may not achieve its investment objective and may even underperform relative to
its benchmark index. A fund's performance also may deviate from that of its
benchmark index due to the daily cash flows to which each fund is subject and
which will result in the ongoing purchases and sales of stocks and
transactional expenses, including brokerage fees. In addition, each fund must
pay fees and expenses that are not borne by an index.
Technology Sector Concentration Risk. Enhanced Nasdaq-100 Fund expects to
concentrate its investments in a particular industry sector to the extent
necessary generally to follow the Nasdaq-100 Index. The risk of concentrating
the fund's investments in issuers that conduct business in the same industry
is that the fund will be more susceptible to the risks that are associated
with that sector than a fund that does not concentrate its investments. As of
February 29, 2000, approximately 72% of the value of the stocks underlying the
Nasdaq-100 Index was concentrated in companies in the technology sector, which
has shown relatively high volatility in price performance. As a result, both
the price performance of the Nasdaq-100 Index and the price of the fund's
shares may be more volatile when compared to other broad-based stock indices.
In addition, the fund's performance will be more severely affected by
unfavorable developments in the technology industry than if it invested in a
broader range of businesses. Individual issuers within the technology sector,
as well as the technology sector as a whole, can be significantly affected by
obsolescence of existing technology, short product cycles, falling prices and
profits, and competition from new market entrants.
Individual Stock Concentration Risk. Enhanced Nasdaq-100 Fund is non-
diversified, which means that it is not subject to certain limitations on its
ability to invest more than 5% of its total assets in securities of a single
issuer. The fund expects to invest more than 5% of its total assets in the
securities of specific companies as needed generally to follow the Nasdaq-100
Index. The identity and capitalization weightings of the companies which
represented 5% or more of the Nasdaq-100 Index as of February 29, 2000 were as
follows: Microsoft Corporation (7.06%), Cisco Systems, Inc. (6.93%), Intel
Corporation (5.88%) and Qualcomm Incorporated (5.33%). When a fund holds a
large position in the securities of one issuer, changes in the financial
condition or in the market's assessment of that issuer may cause larger
changes in the fund's total return and in the price of its shares than if the
fund held only a smaller position.
Derivatives Risk. The value of "derivatives"--so called because their value
"derives" from the value of an underlying asset, reference rate or index--may
rise or fall more rapidly than other investments. For some
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Prospectus Page 9
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PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
derivatives, it is possible for a fund to lose more than the amount it
invested in the derivative. Options and futures contracts are examples of
derivatives. A fund's use of derivatives may not succeed for various reasons,
including unexpected changes in the values of the derivatives or the assets
underlying the derivatives. If a fund uses derivatives to adjust or "hedge"
the overall risk of its portfolio, it is possible that the hedge will not
succeed if changes in the value of the derivatives that are not matched by
opposite changes in the value of the rest of a fund's portfolio.
Foreign Securities Risk. Foreign securities involve risks that normally are
not associated with securities of U.S. issuers. These include risks relating
to political, social and economic developments abroad and differences between
U.S. and foreign regulatory requirements and market practices.
Additional Investment Strategies
Use of Proceeds of Initial Offering. The funds may not be fully invested in
stocks until approximately 30 days after they begin investment operations.
During that period, each fund may invest a larger than normal portion of its
assets in short-term debt obligations, money market instruments and options
and futures contracts as well as purchasing stocks represented in its
benchmark index.
Portfolio Turnover. Each fund may engage in frequent trading to achieve its
investment objective. Frequent trading can result in portfolio turnover of
100% or more (high portfolio turnover).
Frequent trading may increase the portion of a fund's capital gains that are
realized for tax purposes in any given year. This may increase the fund's
taxable dividends in that year. Frequent trading also may increase the portion
of a fund's realized capital gains that are considered "short-term" for tax
purposes. Shareholders will pay higher taxes on dividends that represent
short-term gains than they would pay on dividends that represent long-term
gains. Frequent trading also may result in higher fund expenses due to
transaction costs.
The funds do not restrict the frequency of trading in order to limit expenses
or the tax effect that the fund's dividends may have on shareholders.
More Information About the Benchmark Indices
The S&P 500 Index is composed of 500 common stocks that are selected by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P"). Most
of these 500 stocks trade on the New York Stock Exchange. These stocks
represent approximately 75% of the market value of all U.S. common stocks but
do not necessarily represent the largest companies. S&P selects the component
stocks included in the S&P 500 Index with the aim of achieving a distribution
that is representative of the various industry components of the U.S. market
for common stocks. S&P also considers aggregate market value and trading
activity in the selection process. Enhanced S&P 500 Fund is not sponsored,
endorsed, sold or promoted by S&P and S&P makes no representation regarding
the advisability of investing in the fund. S&P 500(R) is a trademark of The
McGraw-Hill Companies, Inc. and has been licensed for use by Mitchell
Hutchins.
The Nasdaq-100 Index is a modified capitalization-weighted index composed of
100 of the largest non-financial domestic or international companies listed on
the National Market tier of The Nasdaq Stock Market, Inc. ("Nasdaq"). Listing
criteria for companies listed on the Nasdaq-100 Index include an average daily
trading volume of at least 100,000 shares and a "seasoning" requirement
(generally, having been listed on a market for at least two years). The
Nasdaq-100 Index was created in 1985. Enhanced Nasdaq-100 Fund is not
sponsored, endorsed, sold or promoted by Nasdaq, and Nasdaq makes no
representation regarding the advisability of investing in the fund. Nasdaq-
100(R) and Nasdaq-100 Index(R) and Nasdaq(R) are trade or service marks of
Nasdaq and have been licensed for use by Mitchell Hutchins.
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Prospectus Page 10
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PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
Your Investment
Managing Your Fund Account
- -------------------------------------------------------------------------------
Initial Subscription Period
During an initial subscription period currently scheduled to end on or about
April 25, 2000, each fund will offer its Class B, C and Y shares at a
subscription price equal to its initial net asset value per share of $10 and
will offer its Class A shares at that price plus any applicable sales charge.
You must pay the purchase price as indicated below. Shares of the funds may
not be purchased through an exchange for shares of other PaineWebber mutual
funds during the initial subscription period. Each fund expects to begin
investment operations shortly after the subscription period ends. After April
28, 2000, the net asset value of fund shares will vary, and the price of fund
shares will be determined as described below.
After the initial sales period ends, each fund may stop offering its shares
for purchase (including exchange purchases) for a period of up to 60 days. You
will not be able to buy shares of a fund during this period, but you will be
able to sell your shares. Mitchell Hutchins will decide whether a fund should
temporarily stop offering its shares based on its judgment of whether the sub-
adviser can invest the initial offering proceeds more effectively without
daily inflows of new money.
During the offering period, PaineWebber and selected dealers may obtain non-
binding indications of interest before they actually confirm any orders. They
will accept subscriptions through the last day of the offering period date,
although no payment is due until the offering period closes. During the
offering period, a fund may cancel or modify the offering of shares without
notice. A fund may also refuse any order in whole or in part.
Flexible Pricing
The funds offer four classes of shares--Class A, Class B, Class C and Class Y.
Each class has different sales charges and ongoing expenses. You can choose
the class that is best for you, based on how much you plan to invest and how
long you plan to hold your fund shares. Class Y shares are only available to
certain types of investors.
Each fund has adopted a plan under rule 12b-1 for its Class A, Class B and
Class C shares that allows it to pay service and (for Class B and Class C
shares) distribution fees for the sale of its shares and services provided to
shareholders. Because the 12b-1 distribution fees for Class B and Class C
shares are paid out of a fund's assets on an ongoing basis, over time they
will increase the cost of your investment and may cost you more than if you
paid a front-end sales charge.
Class A Shares
Class A shares have a front-end sales charge that is included in the offering
price of the Class A shares. This sales charge is not invested in the fund.
Class A shares pay an annual 12b-1 service fee of 0.25% of average net assets,
but they pay no 12b-1 distribution fees. The ongoing expenses for Class A
shares are lower than for Class B and Class C shares.
The Class A sales charges for each fund are described in the following tables.
Enhanced S&P 500 Fund--Class A Sales Charges
<TABLE>
<CAPTION>
Sales Charge as a Percentage of: Discount to Selected Dealers as
Amount of Investment Offering Price Net Amount Invested Percentage of Offering Price*
- -------------------- -------------- ------------------- -------------------------------
<S> <C> <C> <C>
Less than $50,000....... 3.00% 3.09% 2.75%
$50,000 to $99,999...... 2.50 2.56 2.25
$100,000 to $249,999.... 2.00 2.04 1.75
$250,000 to $499,999.... 1.50 1.52 1.25
$500,000 to $999,999.... 1.25 1.27 1.00
$1,000,000 and over
(1).................... None None 0.50(2)
</TABLE>
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Prospectus Page 11
<PAGE>
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PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
Enhanced Nasdaq-100 Fund--Class A Sales Charges
<TABLE>
<CAPTION>
Sales Charge as a Percentage of: Discount to Selected Dealers as
Amount of Investment Offering Price Net Amount Invested Percentage of Offering Price*
- -------------------- -------------- ------------------- -------------------------------
<S> <C> <C> <C>
Less than $50,000....... 4.50% 4.71% 4.25%
$50,000 to $99,999...... 4.00 4.17 3.75
$100,000 to $249,999.... 3.50 3.63 3.25
$250,000 to $499,999.... 2.50 2.56 2.25
$500,000 to $999,999.... 1.75 1.78 1.50
$1,000,000 and over
(1).................... None None 1.00(2)
</TABLE>
- -------
* For the initial subscription period ending on or about April 25, 2000,
Mitchell Hutchins will reallow the full amount of the sales charge to
selected dealers.
(1) A contingent deferred sales charge of 1% (0.50% for Enhanced S&P 500 Fund)
of the shares' offering price or the net asset value at the time of sale
by the shareholder, whichever is less, is charged on sales of shares made
within one year of the purchase date. Class A shares representing
reinvestment of dividends are not subject to this charge. Withdrawals in
the first year after purchase of up to 12% of the value of the fund
account under the Fund's Systematic Withdrawal Plan are not subject to
this charge.
(2) Mitchell Hutchins pays 1% (0.50% for Enhanced S&P 500 Fund) to
PaineWebber.
Sales Charge Reductions and Waivers. You may qualify for a lower sales charge
if you already own Class A shares of a PaineWebber mutual fund. You can
combine the value of Class A shares that you own in other PaineWebber funds
and the purchase amount of the Class A shares of the PaineWebber fund that you
are buying.
You may also qualify for a lower sales charge if you combine your purchases
with those of:
. your spouse, parents or children under age 21;
. your Individual Retirement Accounts (IRAs);
. certain employee benefit plans, including 401(k) plans;
. a company that you control;
. a trust that you created;
. Uniform Gifts to Minors Act/Uniform Transfers to Minors Act accounts created
by you or by a group of investors for your children; or
. accounts with the same adviser.
You may qualify for a complete waiver of the sales charge for Class A shares
if you:
. Are an employee of PaineWebber or its affiliates or the spouse, parent or
child under age 21 of a PaineWebber employee;
. Buy these shares through a PaineWebber Financial Advisor who was formerly
employed as an investment executive with a competing brokerage firm that was
registered as a broker-dealer with the SEC, and
--you were the Financial Advisor's client at the competing brokerage firm;
--within 90 days of buying shares in a fund, you sell shares of one or more
mutual funds that were principally underwritten by the competing brokerage
firm or its affiliates, and you either paid a sales charge to buy those
shares, pay a contingent deferred sales charge when selling them or held
those shares until the contingent deferred sales charge was waived; and
--you purchase an amount that does not exceed the total amount of money you
received from the sale of the other mutual fund;
. Acquire these shares through the reinvestment of dividends of a PaineWebber
unit investment trust;
. Are a 401(k) or 403(b) qualified employee benefit plan with 50 or more
eligible employees in the plan or at least $1 million in assets;
. Are a participant in the PaineWebber Members OnlySM Program. For investments
made pursuant to this waiver, Mitchell Hutchins may make payments out of its
own resources to PaineWebber and to participating membership organizations
in a total amount not to exceed 1% of the amount invested; or
. Acquire these shares through a PaineWebber InsightOneSM Program brokerage
account.
-----------
- -------------------------------------------------------------------------------
Prospectus Page 12
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
Note: See the funds' SAI for some other sales charge waivers. If you think you
qualify for any sales charge reductions or waivers, you may need to provide
documentation to PaineWebber or the funds. For more information, you should
contact your PaineWebber Financial Advisor or correspondent firm or call 1-800-
647-1568. If you want information on the fund's Systematic Withdrawal Plan, see
the SAI or contact your PaineWebber Financial Advisor or correspondent firm.
Class B Shares
Class B shares have a contingent deferred sales charge. When you purchase Class
B shares, we invest 100% of your purchase in fund shares. However, you may have
to pay the deferred sales charge when you sell your fund shares, depending on
how long you own the shares.
Class B shares pay an annual 12b-1 distribution fee (0.40% of average net
assets for Enhanced S&P 500 Fund and 0.75% of average net assets for Enhanced
Nasdaq-100 Fund). Both funds also pay an annual 12b-1 service fee of 0.25% of
average net assets. If you hold your Class B shares for six years, they will
automatically convert to Class A shares, which have lower ongoing expenses.
If you sell Class B shares before the end of six years, you will pay a deferred
sales charge. We calculate the deferred sales charge by multiplying the lesser
of the net asset value of the Class B shares at the time of purchase or the net
asset value at the time of sale by the percentage shown below:
Enhanced S&P 500 Fund
<TABLE>
<CAPTION>
Percentage by which the
If you sell shares' net asset
shares within: value is multiplied:
- -------------- -----------------------
<S> <C>
1st year since purchase................................. 3%
2nd year since purchase................................. 3
3rd year since purchase................................. 2
4th year since purchase................................. 2
5th year since purchase................................. 1
6th year since purchase................................. 1
7th year since purchase................................. None
</TABLE>
Enhanced Nasdaq-100 Fund
<TABLE>
<CAPTION>
Percentage by which the
If you sell shares' net asset
shares within: value is multiplied:
- -------------- -----------------------
<S> <C>
1st year since purchase................................. 5%
2nd year since purchase................................. 4
3rd year since purchase................................. 3
4th year since purchase................................. 2
5th year since purchase................................. 2
6th year since purchase................................. 1
7th year since purchase................................. None
</TABLE>
We will not impose the deferred sales charge on Class B shares representing
reinvestment of dividends or on withdrawals in any year of up to 12% of the
value of your Class B shares under the Systematic Withdrawal Plan.
To minimize your deferred sales charge, we will assume that you are selling:
. First, Class B shares representing reinvested dividends, and
. Second, Class B shares that you have owned the longest.
Sales Charge Waivers. You may qualify for a waiver of the deferred sales charge
on a sale of shares if:
. You participate in the Systematic Withdrawal Plan;
. You are older than 59-1/2 and are selling shares to take a distribution from
certain types of retirement plans;
. You receive a tax-free return of an excess IRA contribution;
. You receive a tax-qualified retirement plan distribution following
retirement; or
. The shares are sold within one year of your death and you owned the shares
either (1) as the sole shareholder or (2) with your spouse as a joint tenant
with the right of survivorship.
Note: If you think you qualify for any of these sales charge waivers, you may
need to provide documentation to PaineWebber or the funds. For more
information, you should contact your PaineWebber Financial Advisor or
correspondent firm or call 1-800-647-1568. If you want information on the
Systematic Withdrawal Plan, see the SAI or contact your PaineWebber Financial
Advisor or correspondent firm.
-----------
- --------------------------------------------------------------------------------
Prospectus Page 13
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
Class C Shares
Class C shares have a level load sales charge in the form of ongoing 12b-1
distribution fees. When you purchase Class C shares, we will invest 100% of
your purchase in fund shares.
Class C shares pay an annual 12b-1 distribution fee (0.40% of average net
assets for Enhanced S&P 500 Fund and 0.75% of average net assets for Enhanced
Nasdaq-100 Fund). Both funds pay an annual 12b-1 service fee of 0.25% of
average net assets. Class C shares do not convert to another class of shares.
This means that you will pay the 12b-1 fees for as long as you own your shares.
Class C shares also have a contingent deferred sales charge of 0.65% for
Enhanced S&P 500 Fund and 1% for Enhanced Nasdaq-100 Fund. You may have to pay
the deferred sales charge if you sell your shares within one year of the date
you purchased them. We calculate the deferred sales charge on sales of Class C
shares by multiplying the applicable percentage by the lesser of the net asset
value of the Class C shares at the time of purchase or the net asset value at
the time of sale. We will not impose the deferred sales charge on Class C
shares representing reinvestment of dividends or on withdrawals in the first
year after purchase of up to 12% of the value of your Class C shares under the
Systematic Withdrawal Plan.
You may be eligible to sell your shares without paying a contingent deferred
sales charge if you:
. Are a 401(k) or 403(b) qualified employee benefit plan with fewer than 100
employees or less than $1 million in assets.
Note: If you think you qualify for any of these sales charge waivers, you may
need to provide documentation to PaineWebber or the funds. For more
information, you should contact your PaineWebber Financial Advisor or
correspondent firm or call 1-800-647-1568. If you want information on the
funds' Systematic Withdrawal Plan, see the SAI or contact your PaineWebber
Financial Advisor or correspondent firm.
Class Y Shares
Class Y shares have no sales charge. Only specific types of investors can
purchase Class Y shares. You may be eligible to purchase Class Y shares if you:
. Buy shares through PaineWebber's PACESM Multi Advisor Program;
. Buy $10 million or more of PaineWebber fund shares at any one time;
. Are a qualified retirement plan with 5,000 or more eligible employees or $50
million in assets; or
. Are an investment company advised by PaineWebber or an affiliate of
PaineWebber.
The trustee of PaineWebber's 401(k) Plus Plan for its employees is also
eligible to purchase Class Y shares.
Class Y shares do not pay ongoing distribution or service fees or sales
charges. The ongoing expenses for Class Y shares are the lowest for all the
classes.
Buying Shares
If you are a PaineWebber client, or a client of a PaineWebber correspondent
firm, you can purchase fund shares through your Financial Advisor. Otherwise,
you can invest in the funds through the funds' transfer agent, PFPC Inc. You
can obtain an application by calling 1-800-647-1568. You must complete and sign
the application and mail it, along with a check, to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you wish to invest in other PaineWebber Funds, you can do so by:
. Contacting your Financial Advisor (if you have an account at PaineWebber or
at a PaineWebber correspondent firm);
. Mailing an application with a check; or
. Opening an account by exchanging shares from another PaineWebber fund.
You do not have to complete an application when you make additional investments
in the same fund.
The funds and Mitchell Hutchins reserve the right to reject a purchase order or
suspend the offering of shares.
<TABLE>
<CAPTION>
Minimum Investments:
- --------------------
<S> <C>
To open an account...................................................... $1,000
To add to an account.................................................... $ 100
</TABLE>
-----------
- --------------------------------------------------------------------------------
Prospectus Page 14
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
Each fund may waive or reduce these amounts for:
. Employees of PaineWebber or its affiliates; or
. Participants in certain pension plans, retirement accounts, unaffiliated
investment programs or the funds' automatic investment plans.
Frequent Trading. The interests of a fund's long-term shareholders and its
ability to manage its investments may be adversely affected when its shares are
repeatedly bought and sold in response to short-term market fluctuations--also
known as "market timing." When large dollar amounts are involved, the fund may
have difficulty implementing long-term investment strategies, because it cannot
predict how much cash it will have to invest. Market timing also may force the
fund to sell portfolio securities at disadvantageous times to raise the cash
needed to buy a market timer's fund shares. These factors may hurt the fund's
performance and its shareholders. When Mitchell Hutchins believes frequent
trading would have a disruptive effect on ability to manage its investments,
Mitchell Hutchins and the fund may reject purchase orders and exchanges into
the fund by any person, group or account that Mitchell Hutchins believes to be
a market timer. A fund may notify the market timer that a purchase order or an
exchange has been rejected after the day the order is placed.
Selling Shares
You can sell your fund shares at any time. If you own more than one class of
shares, you should specify which class you want to sell. If you do not, the
fund will assume that you want to sell shares in the following order: Class A,
then Class C, then Class B and last, Class Y.
If you want to sell shares that you purchased recently, the fund may delay
payment until it verifies that it has received good payment. If you purchased
shares by check, this can take up to 15 days.
If you have an account with PaineWebber or a PaineWebber correspondent firm,
you can sell shares by contacting your Financial Advisor.
If you do not have an account at PaineWebber or a correspondent firm, and you
bought your shares through the transfer agent, you can sell your shares by
writing to the fund's transfer agent. Your letter must include:
. Your name and address;
. The fund's name;
. The fund account number;
. The dollar amount or number of shares you want to sell; and
. A guarantee of each registered owner's signature. A signature guarantee may
be obtained from a financial institution, broker, dealer or clearing agency
that is a participant in one of the medallion programs recognized by the
Securities Transfer Agents Association. These are: Securities Transfer Agents
Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and the
New York Stock Exchange Medallion Signature Program (MSP). The fund will not
accept signature guarantees that are not a part of these programs.
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
If you sell Class A shares and then repurchase Class A shares of the same fund
within 365 days of the sale, you can reinstate your account without paying a
sales charge.
It costs each fund money to maintain shareholder accounts. Therefore, the funds
reserve the right to repurchase all shares in any account that has a net asset
value of less than $500. If a fund elects to do this with your account, it will
notify you that you can increase the amount invested to $500 or more within 60
days. A fund will not repurchase shares in accounts that fall below $500 solely
because of a decrease in the fund's net asset value.
Exchanging Shares
Except as described below, you may exchange Class A, Class B or Class C shares
of each fund for shares of the same class of most other PaineWebber funds. You
may not exchange Class Y shares. You also may not exchange shares of other
PaineWebber mutual funds for shares of the funds during the initial
subscription period or during the following period of up to 60 days that the
funds may stop offering their shares for purchase.
-----------
- --------------------------------------------------------------------------------
Prospectus Page 15
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
You will not pay either a front-end sales charge or a deferred sales charge
when you exchange shares. However, you may have to pay a deferred sales charge
if you later sell the shares you acquired in the exchange. Each fund will use
the date that you purchased the shares in the first fund to determine whether
you must pay a deferred sales charge when you sell the shares in the acquired
fund.
Other PaineWebber funds may have different minimum investment amounts. You may
not be able to exchange your shares if your exchange is not as large as the
minimum investment amount in that other fund.
You may exchange shares of one fund for shares of another fund only after the
first purchase has settled and the first fund has received your payment.
PaineWebber and Correspondent Firm Clients. If you bought your shares through
PaineWebber or a correspondent firm, you may exchange your shares by placing an
order with your Financial Advisor.
Other Investors. If you are not a PaineWebber client, you may exchange your
shares by writing to the fund's transfer agent. You must include:
. Your name and address;
. The name of the fund whose shares you are selling and the name of the fund
whose shares you want to buy;
. Your account number;
. How much you are exchanging (by dollar amount or by number of shares to be
sold); and
. A guarantee of your signature. (See "Buying Shares" for information on
obtaining a signature guarantee.)
Mail the letter to:
PFPC Inc.
Attn.: PaineWebber Mutual Funds
P.O. Box 8950
Wilmington, DE 19899.
A fund may modify or terminate the exchange privilege at any time, subject to
any required notice.
Pricing and Valuation
The price at which you may buy, sell or exchange fund shares is based on net
asset value per share. Each fund calculates net asset value on days that the
New York Stock Exchange is open. The fund calculates net asset value separately
for each class as of the close of regular trading on the NYSE (generally, 4:00
p.m., Eastern time). The NYSE normally is not open, and the funds do not price
their shares, on most national holidays and on Good Friday. If trading on the
NYSE is halted for the day before 4:00 p.m., Eastern time, each fund's net
asset value per share will be calculated as of the time trading was halted.
Your price for buying, selling or exchanging shares will be based on the net
asset value that is next calculated after the fund accepts your order. If you
place your order through PaineWebber, your PaineWebber Financial Advisor is
responsible for making sure that your order is promptly sent to the fund.
You should keep in mind that a front-end sales charge may be applied to your
purchase if you buy Class A or Class C shares. A deferred sales charge may be
applied when you sell Class B or Class C shares.
Each fund calculates its net asset value based on the current market value for
its portfolio securities. The funds normally obtain market values for their
securities from independent pricing services that use reported last sales
prices, current market quotations or valuations from computerized "matrix"
systems that derive values based on comparable securities. If a market value is
not available from an independent pricing source for a particular security,
that security is valued at a fair value determined by or under the direction of
the fund's board. The funds normally use the amortized cost method to value
debt securities that will mature in 60 days or less.
-----------
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Prospectus Page 16
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100
Fund
Management
- -------------------------------------------------------------------------------
Investment Adviser
Mitchell Hutchins is the investment adviser and administrator for each fund.
Mitchell Hutchins is located at 51 West 52nd Street, New York, New York,
10019-6114, and is a wholly owned asset management subsidiary of PaineWebber
Incorporated. On January 31, 2000, Mitchell Hutchins was adviser or sub-
adviser of 31 investment companies with 75 separate portfolios and aggregate
assets of approximately $52.7 billion.
DSI International Management, Inc., also a wholly owned asset management
subsidiary of PaineWebber Incorporated, is the sub-adviser for each fund. DSI
is located at 301 Merritt 7, Norwalk, Connecticut 06851. As of January 31,
2000, DSI had over $5.0 billion in assets under management. Although DSI has
been in the investment advisory business since 1988, it has not previously
advised mutual funds.
PaineWebber Incorporated is wholly owned by Paine Webber Group Inc., a
publicly owned financial services holding company.
Portfolio Manager
DSI uses a team approach in its quantitative management of each fund's
portfolio.
Advisory Fees
The funds pay fees to Mitchell Hutchins for its advisory and administration
services at the following annual contract rates, expressed as a percentage of
a fund's average daily net assets.
<TABLE>
<S> <C>
Enhanced S&P 500 Fund..................................................... 0.40%
Enhanced Nasdaq-100 Fund.................................................. 0.75%
</TABLE>
Other Information
The funds have received an exemptive order from the SEC that permits the board
to appoint and replace sub-advisers and to amend sub-advisory contracts
without obtaining shareholder approval.
-----------
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Prospectus Page 17
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-
100 Fund
Enhanced S&P 500 Fund--Additional Information About DSI
Performance information relating to DSI's proprietary enhanced S&P 500 strategy
and the S&P 500 Index is set forth below. There is no comparable prior account
performance for Enhanced Nasdaq-100 Fund.
Although Enhanced S&P 500 Fund is new and has no performance information to
include in this prospectus, DSI will adhere to its proprietary enhanced S&P 500
strategy in selecting the fund's investments. The composite performance results
for all private accounts with discretionary authority managed by DSI using this
strategy since October 1, 1996 are provided in the bar chart and table below.
These returns assume that all dividends have been reinvested. Because the
private accounts and Enhanced S&P 500 Fund invest primarily in stocks included
in the S&P 500 Index, returns for the S&P 500 Index also are shown. The S&P 500
Index is an unmanaged index of equity securities that is a measure of the U.S.
stock market performance. While the total returns for the S&P 500 Index reflect
the reinvestment of dividends, they do not reflect any sales charges or
expenses, nor do they reflect transaction costs.
This performance information does not represent historical performance of
Enhanced S&P 500 Fund, should not be considered a substitute for the fund's
performance and should not be interpreted as predicting the fund's future
performance. The private accounts have investment objectives, policies and
investment strategies that are substantially similar to those of the fund.
However, private accounts are not subject to certain investment and tax law
limitations that are imposed on registered investment companies. These
limitations are applicable to the fund and could cause its performance to be
lower than that of similarly managed private accounts.
The performance information used in the following tables was obtained from the
records maintained by DSI and adjusted by Mitchell Hutchins to reflect the
estimated fees and expenses of Enhanced S&P 500 Fund.
Bar Chart: Composite Annual Total Returns of Private Accounts Managed with DSI
Enhanced S&P 500 Strategy and Annual Total Returns of S&P 500 Index
- -------
* The bar chart shows the effect on the Composite Annual Returns of Similar
Accounts of the estimated annual expenses a Class A shareholder is expected
to pay each year. The returns for the other classes of shares offered by the
fund would differ because those classes do not have the same expenses. The
bar chart does not reflect the effect of sales charges. If it did, the total
returns shown would be lower.
Table: Composite Average Annual Total Returns of Private Accounts Managed with
DSI Enhanced S&P 500 Strategy (adjusted to show the maximum sales load and
estimated annual expenses of each class of shares) and Average Annual Total
Returns of S&P 500 Index**
<TABLE>
<CAPTION>
DSI Composite Average Annual
Total
Returns of Similar Accounts as
of 12/31/99 Class A Class B Class C Class Y S&P 500 Index
- ------------------------------ ------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
One Year........................ 16.55% 16.67% 19.04% 20.44% 21.04%
Life (since 10/1/96)............ 27.44% 27.78% 28.11% 28.93% 28.30%
</TABLE>
- -------
** The composite average annual total returns in the table reflects both
maximum sales charges for the fund's Class A, B and C shares and the
estimated annual expenses the shareholders of Class A, B, C and Y shares are
expected to pay each year.
-----------
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Prospectus Page 18
<PAGE>
- -------------------------------------------------------------------------------
-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100 Fund
Dividends and Taxes
- -------------------------------------------------------------------------------
Dividends
The funds normally declare and pay dividends, if any, annually.
Classes with higher expenses are expected to have lower dividends. For
example, Class B and Class C shares are expected to have the lowest dividends
of any class of the fund's shares, while Class Y shares are expected to have
the highest.
You will receive dividends in additional shares of the same class unless you
elect to receive them in cash. Contact your Financial Advisor at PaineWebber
or one of its correspondent firms if you prefer to receive dividends in cash.
Taxes
The dividends that you receive from the funds generally are subject to federal
income tax regardless of whether you receive them in additional fund shares or
in cash. If you hold fund shares through a tax-exempt account or plan, such as
an IRA or 401(k) plan, dividends on your shares generally will not be subject
to tax.
When you sell fund shares, you generally will be subject to federal income tax
on any gain you realize. If you exchange a fund's shares for shares of another
PaineWebber mutual fund, the transaction will be treated as a sale of the
first fund's shares, and any gain will be subject to federal income tax.
Each fund expects that its dividends will be comprised primarily of capital
gain distributions. The distribution of capital gains will be taxed at a lower
rate than ordinary income if the fund held the assets that generated the gains
for more than 12 months. Each fund will tell you how you should treat its
dividends for tax purposes.
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Prospectus Page 19
<PAGE>
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-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-100 Fund
Appendix
- -------------------------------------------------------------------------------
Additional Information Concerning the S&P 500 Index. Enhanced S&P 500 Fund is
not sponsored, endorsed, sold or promoted by Standard & Poor's, a division of
The McGraw-Hill Companies, Inc. ("S&P"). S&P makes no representation or
warranty, express or implied, to the shareholders of the fund or any member of
the public regarding the advisability of investing in securities generally or
in the fund particularly or the ability of the S&P 500 Index to track general
stock market performance. S&P's only relationship to Mitchell Hutchins or the
fund is the licensing of certain trademarks and trade names of S&P and the S&P
500 Index, which is determined, composed, and calculated by S&P without regard
to Mitchell Hutchins or the fund. S&P has no obligation to take the needs of
Mitchell Hutchins or the shareholders of the fund into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not
responsible for and has not participated in the timing of the issuance or sale
of the fund's shares or the determination or calculation of the equation by
which shares of the fund are priced or converted into cash. S&P has no
obligation or liability in connection with the administration of the fund or
the marketing or sale of the fund's shares.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500
Index or any data included therein, and S&P shall have no liability for any
errors, omissions or interruptions therein. S&P makes no warranty, express or
implied, as to results to be obtained by the fund or its shareholders or any
other person or entity from the use of the S&P 500 Index or any data included
therein. S&P makes no express or implied warranties and expressly disclaims
all warranties of merchantability or fitness for a particular purpose or use
with respect to the S&P 500 Index or any data included therein. Without
limiting any of the foregoing, in no event shall S&P have any liability for
any special, punitive, indirect, or consequential damages (including lost
profits), even if notified of the possibility of such damages.
Additional Information Concerning the Nasdaq-100 Index. Enhanced Nasdaq-100
Fund is not sponsored, endorsed, sold or promoted by The Nasdaq Stock Market,
Inc. (including its affiliates) (Nasdaq, with its affiliates, are referred to
as the Corporations). The Corporations have not passed on the legality or
suitability of, or the accuracy or adequacy of descriptions and disclosures
relating to, the fund. The Corporations make no representation or warranty,
express or implied, to the shareholders of the fund or any member of the
public regarding the advisability of investing in securities generally or in
the fund particularly, or the ability of the Nasdaq-100 Index(R) to track
general stock market performance. The Corporations' only relationship to the
fund or Mitchell Hutchins is in the licensing of the Nasdaq-100(R), Nasdaq-100
Index(R), and Nasdaq(R) trademarks or service marks, and certain trade names
of the Corporations and the use of the Nasdaq-100 Index(R) which is
determined, composed and calculated by Nasdaq without regard to the fund or
Mitchell Hutchins. Nasdaq has no obligation to take the needs of Mitchell
Hutchins or the shareholders of the fund into consideration in determining,
composing or calculating the Nasdaq-100 Index(R). The Corporations are not
responsible for and have not participated in the timing of the issuance or
sale of the fund's shares or the determination or calculation of the equation
by which shares of the fund are priced or converted into cash. The
Corporations have no liability in connection with the administration,
marketing or trading of the fund's shares.
The Corporations do not guarantee the accuracy and/or uninterrupted
calculation of the Nasdaq-100 Index(R) or any data included therein. The
Corporations make no warranty, express or implied, as to results to be
obtained by Mitchell Hutchins, the shareholders of the fund or any other
person or entity from the use of the Nasdaq-100 Index(R) or any data included
therein. The Corporations make no express or implies warranties, and expressly
disclaim all warranties of merchantability or fitness for a particular purpose
or use with respect to the Nasdaq-100 Index(R) or any data included therein.
Without limiting any of the foregoing, in no event shall the Corporations have
any liability for any lost profits or special, incidental, punitive, indirect,
or consequential damages, even if notified of the possibility of such damages.
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Prospectus Page 20
<PAGE>
- --------------------------------------------------------------------------------
-------------------
PaineWebber Enhanced S&P 500 Fund PaineWebber Enhanced Nasdaq-
100 Fund
If you want more information about the funds, the following document is
available free upon request:
Statement of Additional Information (SAI)
The SAI provides more detailed information about the funds and is incorporated
by reference into this prospectus.
You may discuss your questions about the funds by contacting your PaineWebber
Financial Advisor. You may obtain free copies of the SAI by contacting the
funds directly at 1-800-647-1568.
You may review and copy information about the funds, including the SAI, at the
Public Reference Room of the Securities and Exchange Commission. You may obtain
information about the operations of the SEC's Public Reference Room by calling
the SEC at 1-202-942-8090. You can get text-only copies of reports and other
information about the funds:
. For a fee, by electronic request at [email protected] or by writing the
SEC's Public Reference Room, Washington, D.C. 20549-0102; or
. Free, from the EDGAR Database on the SEC's Internet website at:
http://www.sec.gov
Mitchell Hutchins Securities Trust
- --PaineWebber Enhanced S&P 500 Fund
- --PaineWebber Enhanced Nasdaq-100 Fund
Investment Company Act File No. 811-09745
(C) 2000 PaineWebber Incorporated. All rights reserved.
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